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A rainbow of forex support or resistance is created by the seven moving averages(ma) in the MT4 technical indicator known as the Rainbow forex indicator. This rainbow serves as a support or resistance area on the chart.
Moving averages identify the dynamic support or resistance levels and the trend’s direction. The price abides by moving averages.
How does the rainbow mt4 indicator work?
The main critical levels on the MT4 chart are located using moving averages (MA). But occasionally they require assistance to provide precise chart reversal spots. To identify important reversal levels on the chart, rainbow forex indicators use a combination of seven moving averages.
This large zone is formed by these seven moving averages (MA). This wide area serves as a level of support or resistance for charts.
Price rebounds from the moving averages (MA) rainbow in forex. A price trend reversal on the chart happens after the rainbow’s breakout. Price trends fluctuate.
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Types of moving averages used in rainbow forex indicator
The rainbow indicator employs seven moving averages with various timeframes. Additionally, you can adjust the time frame to meet your needs. However, for the subsequent periods, we advise using moving averages from low to high.
- 9 Period
- 16 Period
- 21 Period
- 35 Period
- 41 Period
- 55 Period
- 61 Period
To create a rainbow of moving averages, these moving averages are advised. Depending on how powerful each moving average is, you can give each moving average a distinct color.
indicator signals in mt4
Buy signal
A purchase signal is displayed when a large bullish candlestick breaks through the seven moving averages and closes above the MAs. If you maintained your position until the price broke the 61-period moving average in the opposite direction, it would be beneficial.
Sell signal
A sell signal is displayed when a sizeable bearish candlestick breaks through the seven moving averages and closes below. Hold with your sell position until there isn’t a breakout in the other direction of the 61-period moving average.
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Conclusion
The greatest and simplest indication for beginning traders is the Rainbow in MT4. If used in conjunction with other confluences, such as chart patterns or trading indicators, it can also provide profits in the forex market.
With a rainbow indicator, use candlestick patterns to obtain very accurate and winning signals.
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